Out of the box

Service fees ... the never-ending nightmare

Ismail Al Hammadi

April 06, 2021

"I wake up from my sleep with a bill worth 70 dirhams a day" ... a sentence that one of the real estate investors in a project told me, and rage fills his heart over an investment in his hope of rewarding returns as he expected, and as he was promoting, but the fee nightmare disappointed him, and he became what he earns Most of him goes to cover the costs of those fees, and in the end he went out with an investment that does not have a camel or camel of returns!

The bill of services that the investor is currently receiving includes fees for six main services, which are services: cleaning, maintenance, utilities, insurance, revenues, and adjustments.

And under each service a group of other fees, for example cleaning service includes seven types of fees, maintenance nine types, and insurance five types.

As for the total types of fees listed under these six main services, it is 27 fees.

Is it reasonable to have 27 charges in one bill?

So, what is the role of 27 auditing firms that agree with them to strengthen the principle of governance and control over jointly owned real estate, and to control annual budgets for service fees and related financial reports?

What is this control and scrutiny ?!

And what year are we talking about: 2019, 2020, or 2021 ?!

The investor pays 70 dirhams per day service fees, at a rate of 25 thousand and 550 dirhams per year for an apartment of about 1400 square feet, and if the annual rental value under the current conditions and prices of the rental market does not exceed 45 thousand dirhams, and after deducting the cost of service fees, what do we call the rest?

Is this the return on investment?

Or the profits that this investor expected to achieve from this unit?

In the event that the unit is not occupied, and no tenant is found, due to the large supply and availability of options, as it is known, from where does the owner pay this amount?

Of course, he will have to pay it from his own wallet, in order to avoid the bill getting inflated, and imposing other fees on it for late payment .. And with logic: Where is the investment return here?

With all due respect to a wide sector of workers in the real estate sector, and some developers and auditing offices, there is a prejudice to the right of the investor in terms of service fees, and my message to all of these is to reconsider them, so is the nature of these projects worth that cost?

We must stop at the limit of comparison with numbers and projects in order to present an invoice worthy of the status of the project or residential complex that has been completed, to keep pace with the aspirations and needs of people with limited and middle incomes from the ground up, whether from spaces that require a high level of service, or large common areas with high maintenance, Or the number of swimming pools, and other services.

And don't forget the expensive cooling system.

It is not the first or the last time that investors complain about the cost of service fees in the real estate sector. Do not be surprised if I told you that most of the investors who withdrew from the market and resold their properties, the service fees were the first reason that prompted them to make this decision.

And if the matter remains as it is, do not blame the investor himself and say that he has failed, but rather blame the value of the fees that were imposed on him, as if it were an indirect tax imposed on everyone who is asked to own a property himself.

While every effort is being made to stimulate market sales and attract more investors through various initiatives and incentives, there are investors who are leaving it as they entered it for the first time, due to the high fees that hindered their investment ambitions.

And all the black points in the sector have been addressed to encourage investment, except for the blackest point that we still suffer from today, even though it is the consensus of investors that is the main obstacle standing in the way of their investment, so is anyone listening!

For your information, the value of sales transactions for the first quarter of this year amounted to 24.8 billion dirhams, registering a growth compared to the same period in 2020 and 2019.

In addition, the value of the service fees was one of the secrets of the shift towards owning villas and "townhouses", as their value is less than owning an apartment in a building.

To read the previous articles of the writer please click on its name.